Despite all that has been said and written about the job creation and economic growth potential of the shale gas boom in Ohio, the effects are just beginning to be felt. However, the awareness, excitement and enthusiasm are unmistakable and widespread across the state.

Much less understood, but perhaps no less important, are the downstream positive impacts of shale gas on the specialty chemical and polymer industries. These sectors already have a large economic stake in the region, but the shale gas growth, particularly the presence of natural gas liquids (NGLs) in the Utica Shale, have the potential to significantly accelerate the growth and improve the global competitiveness of Ohio's specialty chemical and polymer industries. In fact, the energy and chemical industries are anchor industries in Ohio, so any developments that benefit both of them should receive strong support statewide.

Purchased raw materials (feed stock) and purchased energy (gas & electricity) are two of the largest cost items for chemical companies, and low-priced, locally sourced natural gas addresses both of those factors. Natural gas liquids (ethane, propane and butane) are crucial feed stocks for high value added products of the chemical industry. As a result, U.S. manufacturing and the chemical industry were hit hard by high natural gas prices between 2004 and 2008. Prices started to fall dramatically as supplies from shale formations began to be realized and understood. Now, low-priced natural gas and ethane from natural gas liquids (NGLs) have the potential to significantly improve the global competiveness of Ohio's chemical companies. The growing supply is also helping to keep Ohio's energy costs among the most competitive in the country.

“The downstream opportunities from locally sourced shale gas appear to be more revolutionary than evolutionary for the specialty chemical and polymer industries,” said Dennis Barber, Executive Director, Ohio Polymer Strategy Council. “Specialty chemicals and polymers already have a strong foundation in the state, but these local, lower-cost feed stocks and reduced energy costs are potentially game-changing for our industry and its supply chain.” Ohio Polymer Strategy Council, based in Westerville, is a united group of senior industry, academic, and government leaders working collectively as a driving force to strengthen Ohio's polymer industry.

Natural gas liquids such as ethane, propane and butane are the shale gas downstream priority for the chemical industry. For example, through the stream cracking process, ethane is used to produce ethylene, which is found in thousands of specialty chemical and polymer products. This method is already a cost-effective means of producing ethylene, and U.S. ethane cracker capacity is expected to increase by as much as 40 percent over the next several years. In a much-anticipated announcement earlier this year, Shell Oil Co. officially selected the Pittsburgh area as the site for an ethane-cracking refinery.

A revitalized Ohio chemical industry will also have a positive impact on other parts of the regional economy, including benefiting transportation and logistics companies (for shipping raw materials and finished goods) and the construction industry (for building plant capacity).

As shale gas development accelerates locally to produce abundant natural gas and NGLs, which will help keep natural gas prices low, many industries and segments, both upstream and downstream, stand to benefit. The specialty chemical and polymer industries will probably be among the first to capitalize, and should enjoy a long-term, positive impact.

DAVE KARPINSKI

Dave Karpinski is Vice President of NorTech and Director of NorTech Energy Enterprise. He leads the organizations efforts to accelerate economic growth in Northeast Ohio's advanced energy industry and has over 20 years of private sector experience in a variety of manufacturing-related industries.